September 19, 2012

Is Obama a “Redistributionist”? Sort of.

In response to the “47 percent” fracas, Mitt Romney has decided to come out swinging: There’s an Obama tape too! One in which Obama says he believes in redistribution!

The tape (audio this time, not video) dates to 1998. Just to give you some context: This was back when Romney was still pro-choice, still pro-gun control, still pro-stem cell research, and still in favor of gays serving openly in the military. It was five years before Romney would, as Massachusetts governor, voice private opposition to Bush’s tax cuts and refrain from supporting them in public, and a mere six years after Romney cast a primary ballot for the Democrat Paul Tsongas. Saving Private Ryan was 1998’s big movie, and the top song was “Too Close” by Next. Best-selling books included The Greatest Generation and The Death of Outrage. Eldridge Cleaver died that year, along with Barry Goldwater and Henry Steele Commager; Bob Hope and Leni Riefenstahl would hang on a few more years. Mark Zuckerberg was 14, Justin Bieber was 4, and Elle Fanning was born that April. Everybody was “Gettin’ Jiggy Wit It.”

Now that we’ve set the stage, here’s what Obama said in 1998: “I think the trick is figuring out, how do we structure government systems that pool resources and hence facilitate some redistribution, because I actually believe in redistribution, at least at a certain level, to make sure that everybody’s got a shot.”

Whatever the context of the original statement, it’s worth asking: Is Obama still a redistributionist, “at least at a certain level,” today?

In the sense that he’s governed during a period of growing income equality, he definitily isn’t. After all, incomes have grown more unequal under Obama. The Gini index, a leading indicator for income inequality, has risen every year since 2006. In 2008 it was 0.466. In 2011, the last year for which data are available, it was 0.477, marking the largest single-year rise since 1993.

The top one percent’s share of the nation’s income fell during Obama’s first year in office, but that wasn’t because Obama is a redistributionist. It was because rich people typically get whacked in recessions. By 2010, the last year for which data are available, the one percent’s income share had resumed its upward climb (to 19.77 percent). By now it has almost certainly matched or exceeded its 2008 level (20.95 percent). Did I mention that median household income has been declining steadily since 2006? The Berkeley economist Emmanuel Saez has calculated that during the first year of the economic recovery (2010) fully 93 percent of all economic gain went straight into the pockets of the one percent, bypassing the rest of the population altogether.

Some redistributionist!

Obviously Obama would like to redistribute income, to some degree, in the opposite direction. But that’s typical. Every president is redistributionist in the sense that redistribution is what government does. It takes tax dollars and reallocates them elsewhere based on what it deems the public good. Part of the public good, the federal government decided long ago, is to help those least able to help themselves, if only (to quote Obama’s words in 1998) “to make sure that everybody’s got a shot” at economic success. Every president going back at least to Franklin Roosevelt has supported some version of this scheme, some more vocally than others.

There is one way Obama has succeeded as a redistributionist: His health care reform law, assuming it remains in place, will effect a great deal of income redistribution by extending health insurance to many people who couldn’t previously afford it, especially through its expansion of Medicaid, the state-federal health insurance program for low-income people. This is not a feature of the law that Obama has made much effort to emphasize, for fear of getting pounced on by Romney (who accomplished a smaller-scale redistribution in Massachusetts with his own health care law). Valuing income distribution achieved through the provision of health insurance is a tricky business that’s been known to drive economists crazy. Do you value it based on the market cost of health insurance or based on how much actual medical care it’s used to obtain? (Because they get sick more, the poor are likely to obtain more.) When medical inflation rages out of control—as it’s been doing for some time now—is it fair to say that redistribution is increasing, even when the subsidized insurance plan in question isn’t buying any more coverage than it did before, and may be buying less? And so on.

I find it easiest to think of it this way. Obama isn’t redistributing income so much as access to health care. Figuring out how much any individual stands to gain from Obamacare is like figuring out how much any individual stands to gain from an increase in Pentagon spending. Assuming the money is spent wisely, we all benefit from the enhanced security. But there’s no denying it costs money, and that under a progressive tax more of that money is paid by the rich.

So is Obama a redistributionist? Short answer: Yes. And so is Romney. Obama hasn’t actually achieved any redistribution during his first term, but he probably will achieve some very meaningful redistribution during his second. That isn’t a reason to vote against him; it’s a reason to vote for him.

Correction. This post originally stated, incorrectly, that the following events occurred in 1998: the death of Princess Di, the release of the movie Titanic, and publication of the books Primary Colors, The Celestine Prophecy, and Men Are From Mars, Women Are From Venus. In fact, Princess Di died and Titanic was released in 1997. The three books were published in 1996, 1993, and 1993, respectively.